MILAN — Another round of shows opens here today amidst political scandal in Italy, riots in the Middle East, the specter of inflation and weak consumer confidence.
This story first appeared in the February 24, 2011 issue of WWD. Subscribe Today.
However, signs of an economic recovery are casting a rosier glow on business going forward, especially as the industry looks to Asia, and China in particular, to fuel growth, as well as to Brazil, Russia and India. The economic impact of the turmoil in the Middle East is still too difficult to gauge, although global stock markets plunged on Tuesday as oil prices climbed due to the riots in Libya.
The relative optimism of the industry stems from a strong end to 2010 after a tough beginning of the year. According to the Italian Chamber of Fashion, in 2010 the industry’s sales are expected to show an increase of 6.5 percent, reaching 60.2 billion euros, or $79.4 billion at average exchange rates, compared with 56.5 billion euros, or $78.5 billion, in 2009. That said, sales in 2010 are lower than in 2008 and only bring the industry back to the level of the mid-Nineties.
In the first half of 2011, revenues are expected to grow 8 percent, with a slowdown forecast in the second half as a result of the slow-growing global economy and the restrictive budgetary policies being implemented in most European countries, as well as in the U.S. “The most intense phase of recovery has come to an end, replaced in almost all major countries by a stabilization,” said the chamber.
“There is no doubt that the economy is picking up. I think the question now is how strong the recovery will be and will it last,” said John Hooks, deputy chairman at Giorgio Armani SpA. “We have always seen strong growth in most of Asia, especially China, and now we are seeing the first signs of improvement in Japan. North America is performing strongly compared to the year before and the rate of recovery in Europe is varied.”
Gianluca Brozzetti, chief executive officer of the Roberto Cavalli Group, said “positive signals” are coming from the Asia-Pacific region but maintained a “cautious” view, citing “macro-economic issues, the debt of several countries and inflation. It’s not over yet.”
The company is planning to open its first signature store in Tokyo in May and one in Beijing in October, in addition to a new boutique in Cannes, France, opening during the international film festival in May. Cavalli’s New York store on Madison Avenue and the one in London will both be expanded and revamped this year.
While acknowledging the rising cost of raw materials and currency fluctuations, executives downplayed the impact on prices or profitability.
Hooks said “increases in material prices are a concern but as this is a common condition we do not expect to be particularly penalized.…We have lived in a period of currency fluctuations for many years now and I think you just learn to live with it.”
Gian Giacomo Ferraris, ceo of Versace SpA, said these issues will have an impact, but that the company had “no plans to raise retail prices” for now. The executive noted that Versace “started the new year with solid worldwide growth. Asia and U.S. retail are performing particularly well, and we are happy to see double-digit growth in Europe, too.”
The chamber said the U.S. dollar “is expected to be stronger against the euro during the first half of the year, with positive effects for Italian exports.”
Running Feb. 23 to March 1, Milan Fashion Week once again has an extended calendar, compared with the three- or four-day marathons a few seasons ago. Opening with Gucci and Alberta Ferretti and closing with Giorgio Armani, DSquared, Iceberg and Just Cavalli, the major designers have agreed to spread their shows throughout the week. Backed by the city of Milan, the chamber has once again secured several central locations, from the 13th-century Loggia dei Mercanti to the stately 17th-century Palazzo Clerici. A new temporary structure, seating up to 1,000 people, will stand in the city’s majestic Piazza Duomo, where the cathedral is located. Passersby will be able to see into the venue and the shows inside in an effort to further open fashion to the city. As for the party scene, the events include a Duran Duran concert organized by Vogue Italia; a Fiat 500 by Gucci event that will also mark the company’s 90th anniversary; a Wall Street Journal/Saks Fifth Avenue cocktail; a tour of the newly opened Museo del Novecento by the chamber and the city of Milan; the “We Love Hair” exhibition by Karl Lagerfeld, and the opening of the Lanvin, Sportmax and Corto Moltedo boutiques.
“The chamber has brought fashion downtown, which is extremely positive, as this is a part of the city that foreigners strongly appreciate,” said Michele Norsa, ceo of Salvatore Ferragamo SpA. “There is more interest in fashion and more events in the evenings, it all seems livelier,” he said, noting that the brand’s stores registered a 40-percent growth in its Milan stores over the past few months.